By Nora Lockwood Tooher
As a solo family lawyer Henry S. Gornbein is used to working alone. But when it comes to divorce cases, Gornbein views himself as part of a team guiding his client through the complicated course of matrimonial breakup.
To help manage the financial aspects of a divorce, Gornbein often calls on a "certified divorce planner." CDPs, as they are commonly known, are financial professionals trained in the complexities of divorce finances who help divorcing couples split their assets fairly and establish a sound financial plan for the future. Their use is considered appropriate for any divorcing couple with at least $250,000 in combined assets.
"You might say, especially in a fairly complicated divorce, the attorney is like the quarterback," said Gornbein, who practices in Bloomfield Hills, Mich. "I'll be working with a certified divorce planner and accountants, as well as business appraisers, real-estate appraisers, sometimes a private investigator, and in most cases, a therapist."
Already trained as accountants, investment advisers or financial planners, certified divorce planners receive specialized training to help divorce clients gather necessary financial information and develop financial projections based on different scenarios for dividing assets. Spouses, their lawyers and the judge in a case each review their projections. All assets and income - including salaries, health benefits, retirement plans, stock options, alimony, child support, living expenses and tax implications - are factored into the financial models.
While some resistance exists within the legal community, an increasing number of divorce lawyers are calling on the expertise of certified divorce planners.
"Some [lawyers] might feel it's their turf," Gornbein commented. "My attitude is the more help I can get, especially in a complicated case, the better off the client is."
Collaborative Effort
Sandra Morris, president of the American Academy of Matrimonial Lawyers, agreed.
"I found they're very helpful," she said. "For one thing, attorneys are not trained in accounting and financial planning, and avoid very strenuously giving that advice to avoid liability issues."
In most cases, Morris said, the attorney is hired first and then recommends the client consult a CDP. In her solo practice in San Diego, Morris often advises clients during their initial meeting with her to consult a certified divorce planner. Although Morris usually makes the referral to a CDP, several attorneys said they have been hired after a client has already hired a divorce planner.
However the divorce planner enters the process, the participation of a financial specialist can benefit both clients and lawyers, according to Morris. While the certified divorce planner wades through the financial morass of a divorce, the attorney is freed up to focus on legal issues.
"I'm working on gathering information and coming up with a plan for a settlement, getting orders that protect the client, set support and divide custody," Morris said. "And while I'm tracking those things, the divorce planner is tracking with the client on the financial end."
Some clients even consult certified divorce planners for "pre-divorce planning," she said, so they can calculate the financial implications of a divorce before deciding whether to end their marriages.
Like Gornbein, Morris said that a certified divorce planner is just one of several professionals she routinely works with in divorce cases.
"We all have quivers full of things to help our clients. For example, we can be of great service to our clients in giving a referral to a psychologist," she said. "This is a very emotional time. The more level-headed people that can help people keep on track, the better."
Several attorneys said that cooperation between attorneys and financial specialists is part of an evolving "collaborative divorce movement." In a collaborative divorce, couples agree to resolve differences without going to court, instead relying on an interdisciplinary team of attorneys, therapists, divorce financial planners and others.
Alan Nobler, a solo attorney and collaborative law specialist in San Jose, Calif., said a collaborative divorce team usually includes a CDP.
"Frequently, there are situations where the people are not able to understand necessarily the whole range of financial possibilities open to them, and using a divorce planner can be of significant help in raising their consciousness to the possibilities," he said.
Using a qualified financial professional also relieves the attorney of sole responsibility for proposing settlements, he said.
"Taking advantage of people who have specific training in dealing with those types of issues can go a long way toward not only making the clients feel better about the range of possibilities being offered to them, but it can help in taking pressure off the attorneys to come up with stuff they're not trained or responsible for," he said.
Growth Industry
Founded 10 years ago by Carol Ann Wilson, a Boulder, Colo., financial planner, the divorce-planning field has mushroomed into one of the financial services industry's high-growth niches.
Currently, there are more than 1,000 certified divorce planners and specialists in the United States and Canada. Most are located in urban areas in densely populated states, such as California, Florida, Illinois, New York and Texas.
The profession's growth is driven by the increasing complexity of personal finances, said Fadi Baradihi, president of The Institute for Certified Divorce Planners, based in Southfield, Mich.
"Tax laws keep changing; there's always new tax-advantaged investments," he said.
Certified divorce planners usually charge $125 to $150 an hour, plus a retainer of $1,300 to $1,500. Financial arrangements are made between the client and the CDP without the involvement of the attorney. The average case takes about 12 hours.
Female clients hire CDPs more often than males, by a 60-to-40 margin. The reason, Baradihi said, is that, in many marriages, the finances in the family are left to the husband. That's partly due to traditional gender roles, which assign money matters to men. Another reason is that women may be out of the work force for longer periods, either for childbirth or to stay home with children. Because they're not bringing home a weekly paycheck, they may not be as involved with the family's finances as their husbands, he said.
In most divorces, the major financial issues are "the house and the pension," Baradihi said. "Usually, what I find is that the wife would like to keep the house to have that continuity, and the husband would like to keep the pension because he feels it's his."
That scenario, however, often produces a less-than-positive outcome for either spouse. There may no longer be enough income to support two households, which means the woman may not be able to pay the mortgage and maintain the house. And a man who wants to hold onto his company pension may not realize that retirement benefits earned during marriage are considered community property. Even if both spouses agree to split the retirement plan, there's a mountain of paperwork involved, including a Qualified Domestic Relations Order (QDRO) that has to be signed by the divorce judge.
Baradihi said his goal is often simply to get clients to face financial reality. After a divorce, he said, the income that previously supported one household will have to support two.
"Something has to give," he said. "If a reduction in lifestyle is not an option, I ask them: Are you OK being broke in three or five years?"
Financial Planning
An executive with a major corporation, Robert Gates, of Ann Arbor, Mich., knew he needed legal help when his 22-year-old marriage dissolved. But he also wanted specialized help in handling the financial fallout of his divorce.
Gates, 48, hired Baradihi to work with his attorney to divide his and his wife's assets equitably and determine fair payments for alimony and child support. Gates and his ex-wife had both agreed that for the sake of their two teenage children they would try to make their divorce as non-acrimonious as possible. But dividing their financial assets was far from simple.
After inventorying the couple's assets and liabilities and assessing both short- and long-term financial needs, Baradihi developed a sophisticated financial model showing how various asset splits would work over a 10-year period. And, although it turned out not to be necessary, Baradihi was also prepared to testify as an expert witness on Gates' behalf.
"His modeling helped expedite things and get us to a place where we could agree on the alimony, child support allocation and asset allocation," said Gates, whose divorce was finalized in March. "At the end, everything netted to 50/50, but we didn't split each and every asset in half."
Morris Armstrong, a certified divorce planner in New Milford, Conn., said that financial planning during divorce extends beyond simply calculating monthly alimony and child support payments.
"You're helping a client develop a financial plan based on what they need going forward. You have to see what all the assets are, what the employment benefits are - 401(k)s, health insurance, pension plans and investments,"he said.
Verna Lilburn, a solo family law practitioner in New Haven, Conn., recently worked with Armstrong to help her client - the husband in a divorce - achieve a fair settlement and establish a working budget.
"It was very, very favorable to have Morris present the financial information in terms of real income and real expenses, and what was taxable and wouldn't be taxable in the settlement," Lilburn said. "The client really felt that all bases had been touched."
Because the client had a clear understanding of the finances involved, it was easier to arrive at a settlement and avoid going to trial. Also, having Armstrong ready to testify in court as a financial expert added some clout to the settlement proposal, she said.
"If they were my figures, the attorney (for the other spouse) would tend to dispute them," she said. "But when the same figures came in from a CDP and we disclosed him as an expert witness, he was given much more credence. Hence, it really was very cost-effective."
Turf Battles
While many attorneys welcome their new financial teammates in the divorce process, others resent the intrusion of non-lawyers onto their turf.
"There are attorneys in general who are resistant to any different approach than to do it the way they've always done it. That's the basis for their resistance to mediation or other approaches," said Barbara Kahn Stark, a divorce attorney in Norwalk, Conn.
"You can ascribe it to ulterior motives, such as lost revenues, or, more generously, to different views as to what's appropriate."
One of a few lawyers trained as a certified divorce planner, Stark is in the process of giving up her law practice in favor of full-time work as a certified divorce planner.
"I finally realized that I had one foot in the lawyer place and one foot in the financial planner place," Stark said. She said that she will continue to work closely with her law partner and associate in her law practice, and that her legal expertise will enhance her value as a divorce planner.
Over the past 27 years, she said, her views on the divorce process have changed dramatically.
"When I was first a divorce lawyer, we figured it was a legal case and we knew it all," she said. "When I think back, I shudder at how little I knew about financial matters."
Younger lawyers, she said, are more likely to appreciate that although divorce is a legal process, it is also an exercise in financial planning.
"There are lawyers who recognize that they are lawyers and not financial people," she said.
Not all attorneys, however, see it that way.
Under pressure from the legal community, the designation "certified divorce planner" is being changed to "certified divorce financial analyst," as of October, Baradihi said.
While there was no organized protest, Baradihi said he received feedback that some attorneys were concerned that certified divorce planners might be encroaching on their billable hours.
"They don't want an infringement on their fees," he said. "The name change clarifies that the role we play is complementary to what they do, and not a replacement to anything."
Lilburn, a solo attorney, in New Haven, said that she has plenty of business and doesn't worry at all about divorce planners cutting into her billings. Instead, she said, she fears that some clients may be reluctant to hire a financial planner because of the additional expense.
"I've personally always enjoyed the assistance of qualified co-workers," she said. "But the public thinks it's going to add another layer of expense."
The reality, she said, is that bringing a CDP into the process can help reduce overall divorce expenses by encouraging a settlement and keeping the divorce out of the courtroom where costs can skyrocket.
Morris also said she doesn't see how working with a CDP would reduce an attorney's fees.
"I don't think it would cut into their billable hours, because it's work attorneys aren't equipped to do, and don't do," she said.
While an attorney might suggest, for example, that a client put half of the joint assets in his or her name in a community property state to protect assets, specific tax and investment recommendations are usually beyond an attorney's financial expertise, she said.
"A divorce attorney would not have the kind of background of an accountant or CPA who would be able to give you some significant advice for your assets or estate planning," she said.
Creative Lawyering
Several attorneys said that their affiliation with certified divorce planners is a definite plus for their practices.
"It's a marketing tool," Gornbein said. "And it's also the fact that in a complicated case, I'll tell someone at the outset, 'You're going to need many people to help - a CDP, an accountant, a therapist, a psychologist, and often, appraisers."
Morris predicted that resistance within the legal community to working with certified divorce planners would eventually dissipate.
"Anything we can find that helps our clients do better, I think attorneys really appreciate that,' she said.
Gornbein agreed.
"I think the more creative ones are not going to be reluctant. I believe you've got to think out of the box, you've got to be more creative," he said. "A good attorney is there to solve problems. And if you can bring more assets, more people to the table, you're going to help your client more."
September 1, 2003
